S&P 500’s Confluent Pullback Zone
With the S&P pulling back from highs, let's explore where prices might find support.
Retreat and Rebound: Analysing S&P 500's Pullback Opportunities
It’s finally happened: the S&P 500 has started to retreat after a strong upward trend. Between late October and early November, the US headline index surged by 28%, marking a significant uptrend.
However, concerns about persistent inflation have led markets to reconsider expectations for rate cuts. Additionally, Iran’s military strike on Israel has raised fears of a larger conflict, potentially disrupting energy supplies in the region. These factors have collectively slowed the S&P's ascent. After forming a small triple top pattern at the beginning of the month, prices have begun to pull back.
Pullbacks are normal in uptrends and can present opportunities to re-enter the market at better risk/reward levels. By analysing various technical indicators, we can identify a confluent pullback zone on the S&P's daily candle chart, offering an estimate of where the pullback might find support.
In the chart below, we observe confluence among three key technical indicators:
38.2% Fibonacci retracement: Reflects a significant Fibonacci level from the October-April rally.
100-Day Simple Moving Average: A widely monitored moving average.
VWAP Anchored to October lows: Represents the volume-weighted average price of investors who bought before the rally.
If prices reach the confluent pullback zone, traders may watch for bullish reversal patterns such as a double bottom, bullish engulfing pattern, or large bullish hammer candle to time their re-entry into the market.
S&P 500 Daily Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Retreat and Rebound: Analysing S&P 500's Pullback Opportunities
It’s finally happened: the S&P 500 has started to retreat after a strong upward trend. Between late October and early November, the US headline index surged by 28%, marking a significant uptrend.
However, concerns about persistent inflation have led markets to reconsider expectations for rate cuts. Additionally, Iran’s military strike on Israel has raised fears of a larger conflict, potentially disrupting energy supplies in the region. These factors have collectively slowed the S&P's ascent. After forming a small triple top pattern at the beginning of the month, prices have begun to pull back.
Pullbacks are normal in uptrends and can present opportunities to re-enter the market at better risk/reward levels. By analysing various technical indicators, we can identify a confluent pullback zone on the S&P's daily candle chart, offering an estimate of where the pullback might find support.
In the chart below, we observe confluence among three key technical indicators:
38.2% Fibonacci retracement: Reflects a significant Fibonacci level from the October-April rally.
100-Day Simple Moving Average: A widely monitored moving average.
VWAP Anchored to October lows: Represents the volume-weighted average price of investors who bought before the rally.
If prices reach the confluent pullback zone, traders may watch for bullish reversal patterns such as a double bottom, bullish engulfing pattern, or large bullish hammer candle to time their re-entry into the market.
S&P 500 Daily Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
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